Kentucky Estate Planning Lawyer
Do I really need a will?
Honestly, it depends. If you have a spouse, children, stepchildren, or grandchildren, the answer is overwhelmingly, “yes!” Without a will, you will have no voice from the grave as to what your desires are concerning your estate. Many people say “well my spouse knows my wishes” but unfortunately, it’s not as easy as that. If you do not have a will, you open the door for complicated probate lawsuits from individuals who may feel that you wanted your estate, or part of it, to transfer to them. The worst part about this is if you have passed, you will not have a way to make your intentions clear.
If you pass without a will, the State will determine what happens with your estate in a process called “intestacy.”
Are there ways to avoid probate court and make it easier for my heirs?
Yes! Through documents such as living trusts, and adding beneficiaries to various accounts such as bank accounts, and retirement accounts, it is possible to have the bulk of your assets completely avoid probate. This is why it is important to meet with an attorney and create an estate plan. It’s not about just creating a will, although that is a great starting point for many individuals. An estate plan is just that, a plan. At The Fleck Firm we will create a plan with goals to get your assets to your beneficiaries fast, easy, and legal upon your passing.
Understanding Kentucky Inheritance Laws
Kentucky is one of the few states to continue implementing dower and curtesy laws. Also, the Bluegrass state remains only one of five states that levy an inheritance tax. Let me explain just a bit about the Kentucky inheritance tax laws. The state has no actual estate tax.
Does the Kentucky Inheritance Tax Affect Everyone?
Not all heirs in the state of Kentucky face paying an inheritance tax or estate tax. It depends on their relationship with the deceased individual which helps determine what ‘class’ they fall into.
Classes of the tax:
- Class A: The spouse, children, siblings, or grandchildren are part of Class A which makes them completely exempt from paying any inheritance taxes.
- Class B: Great-grandchildren, aunts, uncles, nephews, and nieces are in the Class B category. They have an exemption of up to $1,000 followed by rates of 4 to 16 percent.
- Class C: The Class C group is made up of friends, cousins, organizations, and others who do not fit in the Classes A and B. They are exempt up to $500 and will then face a rate of 6 to 16 percent.
Inheritance Tax Rules
Only residents and non-residents who own Kentucky property pay inheritance tax. The tax must be filed within 18 months following the individual’s death. It is a benefit to file early because you are given nine months to pay off the entire amount to receive the five percent discount. You can also file for a payment plan to make monthly installment payments until the loan is paid off. Anyone who files a late inheritance tax will face a late penalty. In some instances, an installment plan is also a useful benefit if you qualify.
Additional Filing Requirements
Taking care of the Kentucky inheritance tax is the first step of the process. In addition, you’ll need to manage other taxes that are needed for the distribution of any estate.
- Individual state and federal income tax returns are due by the Tax Day of the following year after the person’s death.
- Federal estate/trust income tax return is due by April the year following the person’s death.
- Federal estate tax return – File within nine months after the individual’s death. However, a six-month extension filed before the end of the nine months remains an option. This tax return is only required if the gross asset and taxable fit value is more than $11.4 million.
Employer Identification Number
Sometimes, depending on the estate, your executor may need to file for an employer identification number with the IRS. The number is considered the social security number for the estate. You can obtain an application online, mail or tax.
A Will in Kentucky
Always create a valid estate will under the Kentucky inheritance tax law. You’ll need to sign your will and have at least two signatures of witnesses who viewed you signing the document. However, if you cannot physically sign your will then you can have someone do it. An executor should be chosen that will manage the expenses, debts, and distribution of the estate.
Kentucky Probate Process
The probate court will process the situation to ensure there is no fraud. If someone passes intestate, the succession laws of Kentucky will start.
- Formal Settlement: This is expensive and considered the highest level of observation.
- Informal Settlement: A certain level of oversight is maintained with informal probate.
- Small Estate: Estates that are under $15,000 in personal property require no probate if a small estate affidavit is filed. Also, this does not include any estate that has real property.
What’s the next step?
If you have any questions about Kentucky inheritance laws, need a will/estate plan, or help with probate, please contact The Fleck Firm today at (270) 446-7000.